A comparison of Japanese and U.S. firms completing initial public offerings

We set out to examine firms breaking into the top tier of for-profit companies in the U.S. and Japan to find differences across the two groups. To accomplish this, we conducted a questionnaire survey of companies that had recently undergone an initial public offering (IPO) in each country and compared them on characteristics frequently associated with new firms.As we expected, even when the different sizes of the two economies were taken into account, there were considerably fewer listings in Japan than in the U.S. One reason for this is that the listing requirements for young Japanese firms, although not stricter, are much more strictly enforced. Hence, fewer Japanese firms are able to list.Our results show that the Japanese firms were markedly different from their U.S. counterparts on several characteristics. They tended to be older and larger, which is consistent with more stringent listing requirements in Japan. They were also much more often led by their original founders. This is a surprising result given that the Japanese firms, being older, had longer to lose their founders. When a successor to the founder was president, it was much more often a relative of the founder than in the U.S. The Japanese founders rated themselves higher on relatively emotional characteristics, such as aggressiveness, paternalism, and charisma than did either the U.S. presidents or the Japanese nonfounder presidents.The Japanese firms relied solely on the president for decision-making prior to the IPO more often than the U.S. firms did. However, the Japanese firms also moved in greater numbers to group decision-making around the time of the IPO.The post-IPO investment strategies of the Japanese firms were characterized by a focus on new product development, an increase in R&D spending, and investment in the company's capital plant. In contrast, the U.S. firms reported more interest in exploiting their existing market and buying other companies, usually leaving R&D spending at its pre-IPO level.Overall, it is surprising that on many characteristics, the Japanese IPOs tended to fall more to the extreme associated with new companies than did the U.S. firms. They were dominated by founder influence, the founders were apparently highly emotional, their management style was initially autocratic, and their strategies targeted innovation and internal development as avenues to growth. This pattern is consistent with a prior hypothesis that the lack of structural support for new firms in Japan results in only the most extreme personalities pursuing and succeeding in company formation.For researchers, a significant implication of this research is that Japanese ventures may not behave according to the same rules as U.S. ventures. Research samples that fail to distinguish nationality may obscure cross-regional variations.For practitioners, the major lesson is that a Japanese venture is likely to be much different from one in the U.S. Dealing with one is probably even more unlike dealing with an established company than working with a U.S. start-up might be.     

Is History Repeating Itself?

Though American pharmaceutical companies continue to dominate global markets, Japanese drug firms are catching up. And with the advent of biotechnology as a commercially viable means of producing drugs, Japanese firms may, in fact, be able to leapfrog their American competitors. To determine whether this is likely to be the case, the following article focuses on Japanese biotechnology policy, which has been taking shape for roughly a decade. Comparison to the laissez-faire American approach to the development of this technology reveals that history may indeed be repeating itself. If the U.S. government does not soon articulate a comprehensive industrial policy, America's mighty pharmaceutical firms may share the unfortunate fate of their predecessors in the automotive and computer industries.     

Lessons from Japan: American and Japanese strategies and goals in the 1990s

This article recounts various Japanese business approaches touted in the 1980s as “Lessons from Japan” for U.S. managers. The logical expectation, given the sheer bulk of the literature, was that U.S. managers would become more “Japanese” in their business strategies and goals while the Japanese would have become more entrenched in their approaches. Questionnaire responses from 95 Japanese and 70 American firms suggest, however, that U.S. managers tend to make few shifts from the strategies and goals they emphasized in the 1980s. Meanwhile Japanese managers report that they expect to move toward more “American” business practices. © 1993 John Wiley & Sons, Inc.     

International strategies of mid-sized firms: A comparison of Indiana and Guangdong Province

A China strategy is becoming more important for a growing number of mid-sized companies as they observe China's increasingly greater impact on the U.S. economy. Our study surveyed Indiana and Guangdong firms to assess their interest in future international engagement in the other's country. Our results confirm current engagement by mid-sized firms from both countries in some activities with the other country, but there is a strong interest in doing more. Hence, there are opportunities for many Indiana organizations to play a role in assisting Indiana firms in developing international expertise, business development, and knowledge of China. In the study, 97 firms from the Guangdong Province and 105 Indiana firms identified their current international activities as well their future intentions relative to business development in the other's country.     

The Formation of Distribution Keiretsu: The Case of Matsushita Electric

The Japanese keiretsu, specifically vertically linked firms, have attracted global attention, and there is continuing dispute over their purpose. They act as close, long-term business relationships between large corporations and a number of selected smaller firms. They have been seen as rational effective systems, especially suited to the circumstances of Japan's industrialisation, and as a factor in its economic success. On the other hand, they have been criticised as closed systems that exclude potential competitors. Keiretsu are generally divided into production keiretsu, financial keiretsu, and distribution keiretsu. As a pioneer of distribution keiretsu, Matsushita (Panasonic) grew in Japan by securing the outlet of its products at ‘appropriate’ prices, and is now its nation's largest electronics manufacturer. Its distribution structure was founded in the 1930s, but the changes introduced in the 1950s finally brought it substantial commercial advantages, and encouraged rivals to form similar networks.     

Management practices in U.S. affiliates of foreign-owned firms: Are “they” just like “Us”?

Despite considerable debate about foreign direct investment in the United States, little research has examined the inner workings of U.S. affiliates of foreign-owned firms. This study examines the management practices in 249 U.S. affiliates of foreign-owned firms. Findings show that practices in marketing, human resource management, and manufacturing tend to more closely resemble the practices of local competitors than those of the foreign parent, whereas for practices in financial control the dominant resemblance is to the parent. Furthermore, findings reveal that affiliates are comprised overwhelmingly of Americans, not only at lower levels of the organization but also in key executive positions, although affiliates of Japanese firms stand apart in their greater reliance on expatriates. Foreign affiliates of multinational firms are revealed as differentiated sets of practices, shaped by the interplay of local responsiveness and internal consistency. The findings also make plain that U.S. affiliates of foreign-owned firms are in many ways very much like American firms. © 1995 John Wiley & Sons, Inc.     

Organizational and environmental impact on the use of Japanese-style HRM policies in Japanese firms in the U.S.

This survey investigates the extent of Japanese-style HRM that is being adopted in Japanese-owned firms in the U.S. It focuses on organizational and environmental factors that influence the design and use of Japanese-style HRM policies in Japanese firms in the U.S. Preliminary results show that there is no single model of Japanese HRM in the U.S. Contextual factors in terms of firm size, firm age, firm type, union status firm location, corporate culture, and the degree of parent control all influence the use of Japanese-style HRM policies and practices in the U.S.© 1992 John Wiley & Sons, Inc.     

International Catalog Mix Adaptation

Abstract

Striking the right balance of adaptation of the international catalog mix may be the key to profitability. U.S. catalog firms, new to international markets, have less experience in adapting than firms in more globalized industries. The literature on international marketing strategy adaptation reveals that this decision depends on the environment, industry, market, product, and characteristics of the firm. This paper examines the influence of market similarity, type of business and the firm's international experience on international catalog adaptation, and explores the effects of catalog adaptation on a firm's performance. We hypothesize that the greater the market similarity, the less likely it is that firms will adjust their catalog. We also argue than adaptation is greater for consumer catalogs than for business-to-business catalogs. A third hypothesis is that more internationally experienced firms will adapt more and a final hypothesis is that a greater degree of adaptation will increase the international catalog performance. The results did not support the association of international catalog adjustment and market similarity, experience, and type of catalog. Findings are mixed both on catalog adaptations and firm performance. We found that some but not all adaptations in the catalog lead to improved performance. We speculate that U.S. catalog firms are making adaptations to reduce the costs of international marketing operations. This cost reduction strategy may not necessarily lead to profitability, thereby discouraging other firms from entering international markets.     

The Effects of Fraud and Lawsuit Revelation on U.S. Executive Turnover and Compensation

This study investigates the impact of fraud/lawsuit revelation on U.S. top executive turnover and compensation. It also examines potential explanatory variables affecting the executive turnover and compensation among U.S. fraud/lawsuit firms. Four important findings are documented. First, there was significantly higher executive turnover among U.S. firms with fraud/lawsuit revelation in the Wall Street Journal than matched firms without such revelation. Second, although on average, U.S. top executives received an increase in cash compensation after fraud/lawsuit revelation, this increase is smaller than that of matched non-fraud/lawsuit firms. Third, fraud/lawsuit firms were more likely to change top executive when chief executive officer (CEO) was not the board chairman and CEO had been on the board for a short time. Fourth, fraud/lawsuit firms were more likely to reduce their executive cash compensation when profitability was low, firms were involved in fraud, the compensation committee size was small, and the board met more often. These findings indicate that although, in general, U.S. fraud/lawsuits firms did not reduce their executive cash compensation, those involved in fraud were more likely to reduce their executive cash compensation than to change their top executives. The finding, that ethical standards is not a significant factor for U.S. executive turnover nor compensation reduction, suggests that ethics appears to play no part in the board’s decisions, and that U.S. firms may have ethical standards in writing but they do not implement nor enforce the standards.     

Environmental Risk and Foreign Equity Ownership in Joint Ventures in China

ABSTRACT

Environmental risk in a host country is a key issue that foreign firms must deal with when deciding how much equity ownership to acquire and how much control to have in an equity joint venture (EJV) in that country. This study examines the relationship between changes in the risk situations in China and the level of foreign equity ownership in the EJV. It hypothesizes that Japanese partners would be more likely than U.S. or Hong Kong partners to acquire a 50% or higher level of equity ownership. This tendency would become more pronounced when the risk conditions in China deteriorate. The empirical results, based on 3,838 EJVs in China that had foreign partners from U.S., Japan, Hong Kong and Europe during the 1979–1992 period, are largely consistent with the hypotheses.     

Auditor realignment,voluntary SOX 404 adoption,and internal control material weakness remediation: Further evidence from U.S.-listed foreign firms

This study examines whether auditor realignments and voluntary Sarbanes-Oxley (SOX) Section 404 adoption are associated with the remediation of internal control material weaknesses (ICMWs) in the case of U.S.-listed foreign companies. Furthermore, we investigate whether the results are driven by the home country’s legal systems. Using a sample of 266 U.S.-listed foreign firm-year observations reporting ICMWs, we found that firms engaging new auditors are more likely to remediate their ICMWs effectively in the subsequent year. Furthermore, we found that firms in the voluntary adoption period are less likely to solve internal control problems and that ICMW remediation significantly improved earnings quality. However, our results hold only for firms from common-law countries. This study provides evidence to academics that auditor realignment can serve as a functional change by which U.S.-listed foreign companies can remediate their ICMWs. Furthermore, this paper extends earlier cross-country research and suggests that country institutional differences affect the internal control reporting behavior of auditors and the effect of ICMW remediation on earnings quality.     

Rating standards around the world: A puzzle?

Using panel data on S&P's credit ratings for firms from 63 countries over the 2000–2016 period, we uncover divergent patterns in the rating standards over time. Standards strengthen by 1.5 notches for U.S. firms and by 2.2 notches for other developed country firms, but weaken by 1.2 notches for emerging country firms. Default and credit spread tests show that standards tightening for U.S. and other developed country firms is likely unwarranted, whereas standards loosening for firms in emerging economies appears to be justified. This novel and puzzling evidence suggests that S&P does not adopt consistent global standards over time.     

Understanding Personal Web Usage in Organizations

Personal web usage, that is, non-work-related use of the Internet for personal purposes during work hours, is a pervasive behavior observed in the daily work environment. U.S. companies have implemented several countermeasures to cope with personal Web usage, but those measures have not successfully mitigated this behavior. Considering the significance of personal Web usage, we need to understand why personal Web usage is not alleviated in current organizations. The goal of this study is to present an empirical investigation of why employees continue personal Web usage based on an extended theory of planned behavior. We are particularly interested in how people's perceptions of moral dimensions contribute to personal Web usage, recognizing that our work environment becomes more Web-embedded. We conducted a field survey of 426 U.S. business professionals and analyzed the data by using partial least squares. As a result, we demonstrate that an individual's attitude, subjective norm, denial of responsibility, self-efficacy, personal computer availability, seclusion of office, and workload are significant factors affecting personal Web usage. Interestingly, current organizational preventive efforts (e.g., Web-based activity monitoring and filtering systems and policies) and moral obligation are not as significant as we originally expected. Key implications for theory and practice are discussed.     

Entry barriers of small and medium‐sized software firms in the Japanese market

The Japanese software market size was U.S. $131,773 million in 2004. Due to limited domestic software production, Japan is highly dependent on imported software products. Despite the market potential for foreign software firms in Japan, almost no research exists on what kind of challenges foreign software firms encounter when they are entering the market. To fill this gap, this article investigates the entry barriers of small and medium‐sized software firms in the Japanese market by using a multicase study. The findings suggest that most of the barriers are firm‐specific and mainly related to firms' resources and capabilities to operate in the market. The entry barriers encountered also seem to differ somewhat from earlier investigations, which have mainly targeted large manufacturing firms. The new observations included common barriers related to the intensive information flow of customization and localization needs and market requirements of software products. The findings are useful for both practice and further research. © 2007 Wiley Periodicals, Inc.     

The Japanese corporate network transferred to North America: Implications for North American firms

A significant difference between Japanese and American corporate environments is the existence of extensive networks of intercorporate agreements among firms in Japan. Networks in Japan are the dominant factor in determining how firms transact with other organizations. Given that Japanese networks are taking root in the American business environment, what does this mean for American firms competing and cooperating with Japanese firms? Drawing on a recent study of North American-Japanese joint ventures, this article examines the Japanese network and considers the implications for outsider firms gaining temporary, and perhaps even permanent access to the network through the formation of alliances and joint ventures with Japanese firms. © 1995 John Wiley & Sons, Inc.     

Information Sharing in Global Supply Chain Alliances

The post–WWII economic expansion of economies such as Japan, South Korea, Hong Kong, Taiwan, Singapore, and more recently China and India was enabled to a significant degree by the increasingly complex, global supply chain networks of large Original Equipment manufacturers (OEMs) in the United States, European Union, and Japan. By linking buyers and suppliers across countries and industries, supply chain management (SCM) practices have a large impact on the economic fortunes of companies and countries throughout the world. Nowhere has the effect of this mutual interdependence been felt more strongly than between the U.S. companies and the Asia-Pacific market. Although the benefits of SCM are well documented, some evidence suggests that the reality of SCM implementation can create additional pressures for suppliers. We identify key problem areas experienced by suppliers and their link to the type of information shared by buying firms. The problem area experienced by most suppliers relates to issues of dependence in the alliance. Mere information sharing is insufficient for a successful alliance, and more information can be associated with a number of problems. For example, lack of information sharing can be associated with a supplier's perception of the buyer expecting excessive support. However, greater information sharing can be associated with a supplier's perception of the buyer passing on an excessive burden. Sharing of financial information is perceived as intrusive and controlling. These apparent contradictions uncover the complexity of the supply chain alliance. The moderating factors appear to be open communication and joint sharing of problem solving procedures—factors identified by suppliers that define a world-class buyer.     

International expansion of U.S. manufacturing family businesses: the effect of ownership and involvement

Family firms play an important role in today's global economy. However, limited empirical research has identified factors that spur these firms' internationalization. Highlighting the altruism that pervades family firms, this exploratory study examines the individual and interactive effects of family ownership and involvement on subsequent internationalization of a firm's operations. Results from the analyses of 409 U.S. manufacturing firms show that family ownership and involvement in the firm as well as the interaction of this ownership with family involvement are significantly and positively associated with internationalization. The implications of the findings for research and managerial practice are discussed.     

EXPANSION STRATEGIES OF U.S. MNCs IN LATIN AMERICA AND THE CARIBBEAN

Significant economic activities in the Latin American and Caribbean countries (LACs) since the debt crisis of the early to mid-1980s have created opportunities for U.S. firms to expand their business presence in the region. This study provides evidence on the shareholders' wealth effects of expansion by U.S. firms into the LACs. Three hundred twenty-two announcements of expansion to the LACs by U.S. firms during 1980 1996 are analyzed using event study methodology. Statistically significant excess returns of 0.52 percent are observed for the average expansion. Analysis of subsamples by mode of expansion shows that announcements of both FDI and non-FDI forms of expansion produce positive significant excess re turns. Significant positive reactions are observed for expansion to Brazil. Cross-sectional regression results provide additional insights into the determinants of wealth effects for these announcements.     

The Changing Structure of Intercorporate Relations Among Britain's Largest Retail Firms, 1975-1997

Empirical studies of the structure of intercorporate relations among large firms in Britain and elsewhere have revealed extensive networks of interconections through interlocking directorships. Although the significance of such linkages has been much discussed, they are widely held to constitute important communication channels which may play a significant role in firms' strategic decision-making. However, these issues have not been examined previously in the case of Britain's retail sector. This paper explores the links, via shared directors, between Britain's twenty largest retail companies over the last two decades. The retailers' connections with other major financial and industrial concerns are also explored. The results indicate that intercorporate relations in the retail sector have been radically transformed as these firms have become progressively integrated into Britain's wider business network.     

Japanese Companies in China: Problems of Human Resource Management

Much of China's recent economic growth has been driven by foreign funded enterprises (FFEs). They continue to invest heavily, making China the largest recipient of foreign direct investment (FDI) among all developing countries. Japanese firms have already shifted the focus of their FDI from the US to Asian countries, including China. However, there are many difficulties which Japanese companies have yet to over-come, especially in human resource management (HRM). Although FDI in China has become a significant phenomenon, it is still under-researched, and the role of Japanese firms and the transferability of Japanese-style management figure prominently amongst the relevant issues. Initial information allows us to make conclusions about which cultural, production, and product factors influence the importation of business systems.